Estimation of change in house sales prices in the United States after heat pump adoption

Abstract

Electrifying most fossil-fuel-burning applications provides a pathway to achieving cost-effective deep decarbonization of the economy. Heat pumps offer a feasible and energy-efficient way to electrify space heating. Here, we show a positive house price premium associated with air source heat pump installations across 23 states in the United States. Residences with an air source heat pump enjoy a 4.3–7.1% (or US$10,400–17,000) price premium on average. Residents who are environmentally conscious, middle class and live in regions with mild climate are more likely to pay a larger price premium. We find that estimated price premiums are larger than the calculated total social benefits of switching to heat pumps. Policymakers could provide information about the estimated price premium to influence the adoption of heat pumps. Estimating the costs of green home improvements is not possible without accurate estimates of their impact on house prices. Now, Shen et al. use the sales data of more than 400,000 properties in the United States to determine how heat pump installations increase house prices.